Kelly Thomas foundation won't answer money questions

Kelly Thomas, as most everyone in Orange County and many across America now know, was a mentally ill homeless man who died after he was beaten by Fullerton police.

The community convulsed. Officers face trial on charges of murder, manslaughter and excessive force. Mental health professionals search for ways to serve those who may not want help. And, tapping something deep in human nature, people try to wring hope from tragedy: For many, the Kelly Thomas Memorial Foundation represents such hope.

Founded in 2011 by Kelly Thomas' father, Ron Thomas, the foundation is a "non-profit organization dedicated to assisting the homeless men, women and children of Orange County," its website says. "By collaborating with other charities and agencies, KTMF seeks to educate communities on the issues and needs surrounding the growing homelessness in our communities while providing direct relief to those in need, through the collection and distribution of donations, clothing and food."

Art shows and benefit concerts in the heart of historic Fullerton marked the one-year anniversary of Kelly Thomas' death in July, and more than $10,000 was raised. But squabbles have broken out over how the money is handled, and we at The Watchdog have been unable to confirm that the foundation has tax-exempt status from the Internal Revenue Service, the only agency that can grant such status.

We did not find the foundation in the IRS database of exempt organizations, current through mid-August. We did not find it via the helpful IRS representative at its telephone hotline for exempt organizations (877-829-5500), who can access organizations approved since mid-August.

We are well aware that there may be glitches with paperwork and computer systems and the human use thereof – so we asked Ron Thomas and his attorney, Garo Mardirossian, to clarify the issue for us. We asked them to forward the application that the foundation filed with the IRS seeking exempt status (Form 1023), as well as the IRS's letter of determination, but none has been forthcoming.

"Everything is legal," Ron Thomas told us, directing us to attorney Mardirossian, who he said is handling the foundation's legal and accounting work. "If you can't find it, that's not our problem. We'll let you make fools out of yourselves."

When we pointed out that we had asked for these items – and an accounting of money raised and money spent – back in July but hadn't heard back, Thomas said that attorney Mardirossian is a very busy man. When we asked Thomas to communicate the urgency of our request to Mardirossian, he said: "What do we owe you? Do we owe you something? To the Orange County Register?"

He said he'd be more than happy, however, to talk about the officers who have been indicted in the death of his son.

Unfortunately, we didn't get to fully respond to Thomas' question, but the response is important so we followed up by email:

Thomas and Mardirossian owe nothing to the Register per se, but to the public at large. Tax-exempt organizations, and their donors, are getting a break from the government. They don't have to pay taxes on their revenues, and their donors get to subtract those donations from their taxable income. That's a privilege, and the responsibility that comes with that privilege is that exempt organizations must spend their money wisely, and for good works. That's why nonprofits are required by law to file financial information with the IRS – so the public, and donors, and yes, even the Register, can see with a reasonable degree of transparency how that money is being handled.

We told Thomas and Mardirossian that we're not quite sure why this inquiry is being treated as an attack. It is not. It is the most basic type of public service, and an exercise in which they might be eager to participate.

We didn't receive any documentation by deadline.

'RED FLAG'

We wanted to double-check if we were being unreasonable, so we contacted nonprofit watchdog Charity Navigator, which rates the efficiency of thousands of prominent charities on its free website.

"Here's the deal," Vice President Sandra Miniutti told us by email. "All tax-exempt organizations have to provide copies of their Form 1023 and their three most recent Form 990's upon request in writing or in person. However, an organization that has not yet been recognized as tax-exempt is not required to provide a copy of its pending Form 1023. Of course, that doesn't apply here b/c the group is telling you that they did get nonprofit status.

"I see this as a huge red flag! Not only are they breaking the law, but they certainly aren't being a model nonprofit. Charities with nothing to hide are transparent and accountable to the public, their donors and other stakeholders. I don't see any reason why a group wouldn't share a copy of its 1023 upon request."

The foundation's website, for the record, sells items from an online store (T-shirts, tank tops, wrist bands, key chains, etc.), and also provides an address where donations can be sent.

'KELLY'S ARMY' MARCHING IN DIFFERENT DIRECTIONS?

Kelly Thomas' death has transformed much in Fullerton. There is a new majority on the City Council. There is a push for more transparent and responsible policing, especially as it relates to the mentally ill. And there is debate among mental health experts about whether it's best to medicate people, even if it's against their wishes.

The first anniversary of Kelly Thomas' death in July was a chance to measure how far things have come, and how far things still need to go. It was observed with benefit art shows and concerts in downtown Fullerton, all meant to help the homeless through the Kelly Thomas Memorial Foundation.

We are not the first ones to tussle with Thomas over details about money.

When he first created a call-to-artists flier last winter – used to attract artist participation in the show – Baxter simply read the foundation's website, which said it was a nonprofit, and promised that all proceeds would be donated to the Kelly Thomas Memorial Foundation. He later printed up thousands of promotional cards saying just that.

He didn't explicitly tell the artists that their donations were tax-deductible, "but there was an email to artists where I said that I would provide a receipt of art sold for tax purposes upon request, which a reasonable person would conclude means that there is at least a chance that their donation would be tax deductable," Baxter told us by email.

About 40 artists participated, donating about 60 pieces. All costs associated with putting on the exhibit were either waived, or paid by Baxter. All of the art was for sale, and in the end the show raised $10,240 for the foundation.

Baxter wanted to ensure that at least half the money went swiftly to homeless services in Fullerton, so he drew up a memorandum of understanding specifying how the money would be used. Fifty percent would go to benefit Fullerton's homeless, transient and/or mentally ill population within 45 days, it said, and would be spent on mental health services, bus passes, motel vouchers, food, clothing, sleeping bags, toiletries medical services and/or storage lockers.

Thomas refused to sign it, Baxter said. But he did agree verbally to do as it specified, give or take a couple of weeks on the time frame to spend the money. Thomas soon donated $2,000 to Fullerton's First Christian Church, which feeds the homeless weekly and provides other services. The other $3,100 or so was supposed to go to Pathways of Hope, a Fullerton based organization that provides emergency food, transitional housing and other support to the hungry and homeless.

There were talks with Pathways, Thomas told Baxter, but no money had been forwarded as of summer's end.

That didn't sit well with Baxter. "I really feel like my reputation was on the line for future shows," Baxter said. "This was about me being accountable to the promises I made to the artists."

Baxter went public, posting his account of what had transpired on Facebook. Our colleagues atOC Weekly wrote about the scuffle. The following day, Baxter met Thomas' lawyer at Union Station in Los Angeles, where he was given a check for $3,120 made out to Pathways of Hope. The day after that, Baxter delivered the check to the Maria Mazzenga, executive director of Pathways of Hope.

"I would like Ron to account for the money that KTMF has taken in – it's not much," Baxter said. "I would like to encourage him to answer the questions that the press is asking."

When Baxter asked Thomas specifically about the foundation's nonprofit status, Thomas said that it had applied, but that approval was still pending, Baxter said.

If the IRS approves such applications, status is backdated to the organization's formation, and thus donations received before status was granted would, indeed, be tax-deductible. If nonprofit status is not granted, however, the donations would not be tax-deductible.

A similar controversy erupted several years ago over Snowball Express, a weekend of Southern California fun for families of warriors killed in Iraq and Afghanistan. It began advertising and collecting donations before getting nonprofit status – which upset many donors. In the end, Snowball Express did get nonprofit status and all was well – but the lesson learned was that organizations in such a position can avoid controversy by simply saying "status pending."

"If not-for-profit status has been applied for, and it will be backdated once approved, then I do not think that what I was told was too misleading," Baxter said. "If they have not applied for their nonprofit status, then I will definitely feel like I was lied to and I will not be happy about that. I hope that is not the case."

He did back out the sales taxes for all sales made at PAS Gallery before turning the $10,240 over to Thomas, Baxter said. Just in case.

(Portrait of Kelly as a toddler with his mother , as well of the painting of Kelly about to be attacked by police, by artist John M. Sollom; Portrait of Kelly smiling by artist Valerie Lewis)

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